Outsourcing Leaders Fuse IT and Business Skills

APRIL 10, 2006 (COMPUTERWORLD) - ORLANDO -- Ron Jensen began his IT career as a self-professed "propeller head." But now he is the purchasing manager for IT professional services at construction equipment manufacturing giant Caterpillar Inc.
"I did the bits and bytes," Jensen said at Gartner's outsourcing conference here last week. He wrote assembly code, programmed in other languages and managed technical units at Peoria, Ill.-based Caterpillar. Then, in his mid-40s, Jensen decided he wanted to take advantage of other opportunities available at the company and earned an MBA.
For those interested in following a similar career path, Jensen's top piece of advice is to learn some business skills. "That's absolutely most important," the 34-year IT veteran said. "Beyond that, it's communication skills [and] interpersonal skills."
Mack Murrell, senior director of enterprise IT operations and services at The Dow Chemical Co., also moved from a technical background to a high-level management post. Murrell, who is part of a three-person IT leadership team at Dow, was trained as an electrical engineer. But, he said, "I didn't want to be a senior electrical engineer at a chemical company."
He was moved into IT management more than a decade ago after he suggested a more standardized approach for some of Dow's IT operations. Like Jensen, he also got an MBA degree along the way.
Midland, Mich.-based Dow has outsourced most of its IT operations to IBM, Hewlett-Packard Co. and Accenture Ltd., but it still has a 600-worker IT staff. Employees who are being groomed for IT leadership positions need to understand the company's business requirements and have "a strong sense of vision" as well as the ability to "blossom where [they] are planted," Murrell said. "We direct their path so they get specific experiences."
Pamela Carreon, who manages offshore outsourcing and enterprise vendor services at Wells Fargo & Co. in San Francisco, said she needs to fill three jobs on her staff and wants people who are good communicators, listeners and problem-solvers. Finance and business management experience are also high on Carreon's skills wish list.
Although Carreon manages Wells Fargo's IT outsourcing relationships, she doesn't have a formal IT background herself: Her major in college was Spanish.
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Burgers From Afar

Fast food giant McDonald’s is outsourcing a few of its operations to agents who work in a call center. Their job is to take orders and relay them back to the relevant restaurants through the Internet. The Santa Maria-based Bronco Communications handles calls from 40 restaurants scattered around the country, while Illinois-based Verety has hired home-based agents to do the job. The call centers have been in operation for the past 18 months, and have weathered protests ranging from the idea being “bizarre” to low voice quality which results in agents having to repeat questions or customers having to repeat orders.
While McDonald’s claims this system decreases the time between orders by a few seconds, the agents are paid only the minimum wages, and are subjected to constant scrutiny. Their system flashes the number of minutes they were away on a break, and they have to click on a pop-up that appears every now and then in around 1.75 seconds to show that they are on the job.

Training Holds The Key

The success of outsourcing your call center operations hinges not on the low costs but on the effectiveness of the agents hired by your outsourcer. The key lies not only in selecting the best, and training them to perform to the standards expected, but in giving them room to grow into their roles.
Very often, companies in India and other Eastern countries train their staff in how to speak the accent of the parent company’s country. They are given an English or American name, and then, they’re good to go. Is that how things are supposed to work?
The answers to many problems faced by call centers today can be found in the way their agents are treated. Most of them are under pressure to effect sales or be courteous to the rudest of customers. To derive their best performance day after day, the company has to stop punishing them for minor transgressions. Rewards should be commensurate to the work performed. Incentives and praise work better than words of rebuke and censorship.
To protect its long-term interests, the company that outsources its operations should play an active part in the selection and training processes. This should not be just a one-off thing at the start of the working relationship. Instead, performances have to be continuously monitored, and problem spots identified and solved.
Call center work is no longer the glamour job it was, with qualified youngsters realizing the pitfalls associated with working night shifts under tremendous pressure to deliver. It’s time organizations that outsourced stepped in to slow down the high personnel turnover in call centers, in order to retain their best agents.

Joint Ventures – Pros and Cons

The joint venture is becoming a popular way for companies that outsource their operations to retain a piece of the ownership pie. The creation of a new legal entity during the launch of a joint venture comes with its share of ups and downs.

On the plus side…

• Both the company and the outsourcer receive revenue and tax advantages
• Risks and rewards are shared alike
• The buyer of outsourcing services is able to exercise control over the outsourced operations
• There is also more transparency of operations
• Financial interests will ensure that both parties pay more attention and commitment to the venture

On the minus…

• This model demands more sophistication from the buyer
• Decision-making is slower
• Clash of corporate cultures of both parties involved in the venture can lead to disastrous consequences

Human Resources Outsourced

The perpetration of technology and computers into almost every aspect of our day to day lives is one of the main reasons for the increase in the outsourcing of human resource functions. This, coupled with the fact that global economy is slowing down and the number of layoffs are increasing, has led research firm Gartner Dataquest to predict that the human resources outsourcing market will climb to $26.3 billion in 2007, in an increase of nearly $4 billion over a three-year period.

A 2004 survey by the Society for Human Resource Management has listed background checks, employee assistance programs, flexible spending account management, payroll, and administration of health and pension benefits as some of the most frequently outsourced functions. Nearly 300 human resource professionals surveyed were in accord when they listed reduction of costs, control of legal risks, access to vendor expertise, and the streamlining of human resources functions as major reasons for outsourcing human resources.

Qantas Workers may oppose outsourcing plans

Qantas is contemplating outsourcing while at the same time it's maintenance workers are deciding to go on strike to pursuade the management to relook at the outsourcing issue. If this action occurs, it will be a major setback for Qantas as it could leave some of it's aircraft out of action leading to inconveniences for it's passengers. ABC Online reports:

Earlier this month, Qantas made a commitment to keep its heavy maintenance work in Australia, by closing its repair base in Sydney and shifting the jobs to its base in Avalon near Melbourne.